Understand the uneven nature of India’s economic recovery | Latest India News

That the Indian economy is recovering from the disruption of the pandemic is an undeniable fact. However, it is not the existence of the reclamation itself that is being questioned, but its nature.

Here are four graphs that suggest India’s post-pandemic growth may have become more uneven.

The different trajectories of fuel consumption

As the pandemic forced the imposition of social distancing norms, tracking mobility levels has become one of the main indicators of the recovery of economic activity in the post-pandemic period.

The level of mobility in India has increased steadily, if the data from the Google Mobility indices are to be believed.

However, it is also true that most technology-based mobility indicators – they use internet-based devices to track mobility – have a formal sector orientation.

For example, the Nomura India Business Resumption Index (Nibri) uses the Apple Driving Index, which pulls data from people with access to Apple devices. This source – the poor are less likely to use mobile internet devices – tends to favor the rich in these indicators.

Tracking fuel consumption from the Petroleum Ministry’s database provides some evidence of this bias and highlights a class aspect in restoring mobility and thus economic activity in the Indian economy.

While the consumption of all types of transport fuels – gasoline, diesel, and aviation turbine fuel (ATF) – fell sharply during the initial lockdown, gasoline and diesel led the recovery when restrictions were relaxed in 2020, a trend that is becoming Continued in 2021.

This was understandable as there were significant restrictions on air traffic even after the lockdown restrictions were relaxed.

In recent months, however, this trend has reversed and ATF consumption closes its gap to pre-pandemic consumption, while the consumption of gasoline and diesel is even declining.

Numbers speak for themselves. Gasoline-diesel consumption in relation to the level before the pandemic (2019-20) has even lost momentum in the last two months, while this trend cannot be observed in the consumption of ATF.

LPG consumption also shows a trend similar to that of gasoline-diesel.

While the exact cause of this trend is predicted speculatively, negative effects of higher gasoline, diesel and LPG prices on consumption and thus mobility cannot be ruled out.

ATF end users are richer than those who consume gasoline-diesel. A March 2021 HT analysis by Vineet Sachdev cited data from a survey commissioned by the Petroleum Ministry to argue that the poor are a major contributor to gasoline and diesel consumption in India.

Difference in the revival of two-wheeler and car sales

Demand for two-wheelers and automobiles is a widely accepted indicator of the purchasing power of the poor and the rich in India.

Data from the Center for Monitoring Indian Economy (CMIE) show that the two moved largely in parallel in the year before the pandemic broke out. That seems to have changed after the pandemic.

While sales of passenger cars experienced a strong recovery in the first quarter of 2021/22, this was not the case for sales of two-wheelers.

A November 2021 Bloomberg Quint story quoted an official from Bajaj Auto Ltd (a major two-wheeler manufacturer in India) who described two-wheeler demand as “stressed”.

Certainly, the sales data for both cars and two-wheelers has been polluted due to the problem on the supply side due to the lack of microchips. Still, the divergence in the revival in demand for cars and bicycles underscores the class difference in purchasing power after the pandemic.

The class difference in economic sentiment

Persistent stress in the RBI Consumer Confidence Surveys (CCS) is one of the most important indicators of the general stress level in the economy.

While the RBI’s CCS is an important statistical evidence, it has two important limitations. CCS is only conducted in urban areas (13 major Indian cities more precisely) and there is no class breakdown of economic sentiment.

CMIE’s consumer sentiment numbers can fill an important gap here. The index of the current economic situation in the consumer pyramid of the CMIE is based on a comparison of the financial situation of households compared to the previous year and their assessment of whether this is a good time to buy consumer goods such as televisions and two-wheelers, etc.

The Current Economic Climate Index highlights the class inequality in terms of the impact of the pandemic.

This index was broadly the same across the various income categories – they varied from less than 1 lakh per year to more than 10 lakh – in November 2017.

While the richest began to widen their gap, it was still not very large until November 2019. This gap widened significantly through November 2020 and still has not closed significantly in November 2021, the last period for which monthly data are available. .

If the Indian economy has to achieve sustained growth, it is crucial that the economic sentiment of the under-rich also recover.

This is all the more important as part of the pent-up demand of the rich for both goods and services (e.g. vacation) could diminish in the future.